As I note in my post “The” Purpose of Patent Law, it is commonly said that “the” purpose of patent law is to incentivize innovation. After all, the Constitution’s patent and copyright clause says Congress is empowered to secure “for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries”–that is, to set up copyright and patent law–in order “To promote the Progress of Science and useful Arts.” It is promotion of innovation–”useful Arts”–that is “the” stated purpose of patent law, at least as stated in the Constitution. But the Patent Act seeks to accomplish this goal by granting to the inventor a limited monopoly (see my post Are Patents “Monopolies”?) in exchange for disclosure. That is, patent law encourages disclosure of ideas by rewarding it. The idea is that inventors would try to keep their ideas secret (protected as a “trade secret”) out of fear competitors could copy them. So by giving the inventor a monopoly that provides him with a temporary respite from competition, he has less fear of disclosing his ideas–and, in fact, the patent law requires full disclosure as the price the inventor pays to receive the monopoly patent grant.
And it is true that hundreds of thousands of invention disclosures are made public to the world each year when patent applications are published (usually published at about 18 months after they are filed). How useful this is, is debatable. After all, many, if not most, innovative products, when sold, can be reverse engineered. That is, the inventor has an incentive to profit off of innovations by incorporating them in products, and when the products are sold competitors, and the world, can learn things from the product themselves. If I invent a better mousetrap, when I sell it people learn about the innovations incorporated in it. In fact the seller has an incentive to explain these innovations in order to sell it. So many patent disclosures are just redundant. [Update: See information appended to the end of this post.]
In any case, there is another, more perverse, way that the patent system encourages invention disclosure: defensive patent publishing. If you come up with an inventive process or design and are using it in your business, you can patent it, sure. But you might not want to waste $20k. Or you might not have millions lying around to use to assert it. Anyway most of these patents are taken out defensively–a sort of “porcupine” defense strategy designed to keep the others with patents from suing you, for fear of being countersued. So we have all these companies spending millions to collect patents just so they don’t sue each other (this erects barriers to entry that keeps little guys out, of course). The point is building up a patent porftolio is a big expensive waste that some companies cannot afford.
Unfortunately, if you fail to patent your own inventions, then the risk is some other company may later independently invent and patent it, and sue you, forcing you to pay damages or even stop using your own invention (there is no general defense for prior users or independent inventors).
In response to this unfortunate situation, one thing you can do is make your invention public in such a way that it becomes part of the public “prior art” to make it more difficult for someone to later file a patent on that invention. There are several ways to do this. One is to file a “statutory invention registration” with the US Patent Office, but this is complicated and expensive (about $920 or $1840; see 37 CFR sec. 1.17(n) and (o) fees). Another would be to self-publish but this has drawbacks. Research Disclosure offers this service, at a cost of $120 per page (sounds expensive, but as Michael Mason of Research Disclosure explains in the comment below, quite often the published document is only one or two pages). Another service is IP.com’s Prior Art Database, which costs $225 per publication for the online version. (A related idea is the idea of an “antipatent.”) As far as I know there is not yet a free, reliable wiki type open source solution for this.
It’s a bit sad that the patent law has not only twisted the arms of patentees to induce them to make public things they would otherwise keep secret, but that it’s inducing innocent, non-patenting companies to have to drop their knickers just to avoid the cost of patenting or of being a victim of a patent suit. But given the current system, this is an option that is not a bad one for companies who have this concern.
Update: Regarding the inadequate disclosure defense: Boldrin & Levine explain Against Intellectual Monopoly various problems with the assumption that the patent system induces useful disclosure in exchange for the patent monopoly grant. As they write (ch. 7, “Secrecy and Patents” section):
A common argument in favor of patent law is that to get a patent you must reveal the secret of your invention. Are patent laws a cure for trade secrecy? Granting a legal monopoly in exchange for revealing the secret of the innovation is one way to make innovations more widely available in the long run. However, as a number of economists have pointed out, in the simplest case this argument fails.
Suppose that each innovation can be kept secret for some period of time, with the actual length varying from innovation to innovation, and that the length of legal patent protection is twenty years. Then the innovator will choose secrecy in those cases where it is possible to keep the secret for longer than twenty years, and will choose patent protection in those cases where the secret can be kept only for less than twenty years. In this case, patent protection has a socially damaging effect. Secrets that can be kept for more than twenty years are still kept for the maximum length of time, while those that without patent would have been monopolized for a shorter time are now monopolized for twenty years.
See also my post Patent Reform Is Here! O Joy!, discussing attempts in patent reform legislation to further water the disclosure function down by eliminating the defense that the patentee failed to disclose the “best mode.”